Two men, including a former JPMorgan Chase executive, have been warned that they will likely face Securities and Exchange Commission lawsuits for their alleged roles in misleading investors about a collateralized debt obligation allegedly structured and marketed on behalf of hedge fund Magnetar Capital.

Michael Llodra, formerly global head of structured product CDOs at JPMorgan, and Edward Steffelin, a former executive at GSC Group, received Wells notices from the SEC in January. The regulator issues Wells notices when it is planning to bring a civil action against individuals or firms.

News of the impending lawsuits comes just weeks after it emerged that JPMorgan is seeking to settle the SEC's regulatory investigation of the $1.1 billion CDO, called "Squared." The allegations against JPMorgan broadly parallel those against Goldman Sachs, which settled an SEC lawsuit last year for $550 million.

The SEC apparently believes that Magnetar had an undisclosed hand in selecting the securities that went into Squared. Magnetar had been betting against the sort of subprime mortgages that comprised the Squared CDO; the hedge fund denies any wrongdoing, and has not been accused of such.

JPMorgan was the underwriter of the 2007 CDO, which GSC managed. Neither Llodra nor Steffelin remain with those firms, the former having left to join Harvard Management Co. in 2008. GSC has since filed for bankruptcy.